The Federal Government of Nigeria has officially published the Deduction of Tax at Source (Withholding) Regulations, 2024, in its latest gazette. This important announcement was made by Taiwo Oyedele, the Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, on Wednesday, October 2, 2024.
The newly gazetted Withholding Tax Regulations introduce significant changes, including reductions in tax rates and full exemptions from withholding tax for many businesses. Notably, this applies to Small and Medium Enterprises (SMEs) with an annual turnover not exceeding ₦25 million. These measures aim to provide relief to businesses and encourage economic growth.
“The commencement date of the new Regulations is September 30, 2024, while implementation will officially begin on January 1, 2025. This timeline allows for a minimum of 90 days’ notice, as required for tax changes under the 2017 National Tax Policy,” Oyedele explained.
He further clarified that the Federal Inland Revenue Service (FIRS), with the approval of the Minister of Finance, can permit early application of the regulations starting from July 1, 2024.
“This provision is designed to allow individuals and businesses that wish to adopt the Regulations earlier to do so. The Regulations are primarily focused on providing relief to businesses rather than imposing additional burdens,” Oyedele stated.
The introduction of these regulations reflects the government’s commitment to fostering a more favorable business environment and addressing the challenges faced by SMEs in Nigeria. By reducing the tax burden, the government aims to promote business growth and economic development.